Apple and Ireland Win €13bn State Aid Appeal
The General Court of the European Union has today annulled the Commission’s decision regarding two Irish tax rulings in favour of Apple. The Commission had considered that the two rulings constituted State Aid, granting Apple €13bn in unlawful tax advantages.
The annulment of the Commission’s decision was on the basis that the Commission had failed to meet the requisite standard of proof. In that regard the outcome is similar to the Court’s rejection of other state aid decisions.
While accepting the Commission’s argument that an OECD arm’s length test was an appropriate tool to assess profit allocation (notwithstanding the absence of such a test in the national law at the time) the Court has concluded that the Commission has failed to prove that profits should have been allocated to the Irish branches. The Commission also failed to show that the tax rulings in dispute were methodologically unsound or the application of discretion.
The Commission will have the ability to appeal this decision to the Court of Justice however, the nature of these findings may make appeal on some of the issues difficult.
The decision is very helpful to those taxpayers in the UK who are affected by the Commission’s decision to regard the partial and full exemption of non-trading financing profits as state aid. The nature of this ruling, consistent with other similar outcomes annulling state aid decisions in the Belgian Excess Profits and Starbucks cases, challenges the Commission’s approach to the UK provisions which assumes that those provisions produce an advantage generally to all taxpayers benefiting from them. Rather, the Court has now consistently required the Commission to prove an advantage in specific cases. The “one-size-fits-all” approach to state aid appears, at the level of the General Court at least, to be precarious.
For those interested in the UK financing profits state aid case, a virtual seminar is being arranged to discuss recent developments and issues which have arisen from HMRC’s collection activities. Please contact Michael Anderson if you would like to attend.
Navigating Domicile Enquiries: Recent Case Review
In recent months, the First-tier Tax Tribunal has presided over 3 headline grabbing domicile cases which, whilst offering little precedential value, set out some useful commentary on the multi factorial approach taken by HMRC and ultimately the tribunal in determining an individual’s domicile status. This note reviews the decisions made in Shah v HMRC  UK FTT 539 (TC), Strachan v HMRC  UKFTT 00617 (TC) and Coller v HMRC  UKFTT 212 (TC).
Mini Umbrella Companies (“MUCs”) Success at Tribunal (Labour Supply; Kittel fraud; Fini fraud)
Iain MacWhannell, instructing David Bedenham, successfully represented an employment intermediary in an appeal against a denial of input tax and £15 million VAT assessment.
The End is Nigh for the Non-Dom Regime
Published in ThoughtLeaders4 Private Client Magazine, Helen McGhee expert analysis of the current state of non-dom tax regime and it's future.
HMRC Makes Changes to COP9
On 14 June 2023, HMRC published a substantially rewritten Code of Practice 9 (“COP9”). Helen McGhee and Megan Durnford set out the key changes implemented as a result of this publication.
Pandora Papers: HMRC issues nudge letters
The Pandora Papers leak of almost 12m documents back in 2021 purportedly exposed the secret accounts and dealings (including potential tax evasion/ avoidance and money laundering) of 35 world leaders (including the late HM Elizabeth II), as well as many politicians and billionaires. The data was obtained by the International Consortium of Investigative Journalists in Washington DC and led to one of the biggest ever global financial investigations.